Incidents:
Recently, the company released its 2023 annual report. The company's annual revenue was 1,503 billion yuan (+3.38% YoY), R&D expenses were $1,937 million (YoY -18.74%), sales expenses were 844 million yuan (+17.98% YoY), management expenses were $536 million (-5.74%), net profit to mother was -2283 million yuan, and net profit after deducting non-return to mother was -2298 million yuan.
Opinions:
In 2023, the company's product sales revenue increased dramatically, overall operating efficiency improved, and losses gradually narrowed. In 2023, the company's revenue was 1,503 billion yuan, including product sales revenue of 1,191 billion yuan, technology licensing and licensing revenue of 284 million yuan, and other revenue from technical services. Product sales revenue increased 58% year over year, mainly driven by a 25% year-on-year increase in sales revenue of treprilizumab to 919 million yuan. R&D expenses were 1,937 billion yuan, a year-on-year decrease of 18.74%, mainly due to strengthening the control of various expenses and optimizing resource allocation; sales expenses of 844 million yuan, up 17.98% year over year, mainly due to increased marketing expenses; and management expenses of 536 million yuan, a decrease of 5.74% year on year, mainly due to strengthened cost control. Net profit attributable to mother/net profit not attributable to mother were -22.83/-2298 million yuan, respectively, and losses were narrower than in 2022 of $105/153 million, respectively. As of December 31, 2023, the company's cash on hand was 3.788 billion yuan.
Domestic medical insurance indications for treprilizumab are expected to expand to 10 in 2024, and overseas commercialization is progressing smoothly. Up to now, 7 indications of Tuoyi have been approved in China, and 6 have been included in the national health insurance catalogue. 2024H1, Tuoyi expects to add three new approved indications (1L RCC, 1L TNBC, 1L ES-SCLC), so the medical insurance indications are expected to expand to 10 this year, 4 of which may be exclusive medical insurance indications (perioperative NSCLC, 1L TNBC, 1L ES-SCLC).
In overseas markets, treprilizumab was officially commercialized in the US market in January 2024, and NPC Indications will peak sales of 200 million US dollars within 3 years. In addition, marketing applications related to treprilizumab have been accepted in the European Union, the United Kingdom, Australia, and Singapore. Marketing applications have been submitted in India, South Africa, Chile, and Jordan, and it is expected that it will be approved for listing in more overseas countries/regions in 2024.
The company's core pipeline in 2024 is rich in catalysts. 1) angerizimab (PCSK9) for hypercholesterolemia was approved for marketing by the NMPA; 2) triplimab (PD-1) had two phase 3 clinical data readings, namely perioperative ESCC and 1L HCC; 3) Tifcemalimab (BTLA) for PD- (L) 1 refractory ChL completed all subjects; 4) JS005 (IL-17A) for completed phase 3 clinical recruitment of psoriasis patients; 5) JS105 (PIKα) JS001 sc (PD-1 subcutaneous dosage form) initiates critical clinical trials.
Investment advice:
We forecast the company's revenue for 2024/25/26 to be RMB 21.06/34.33/RMB 4.694 billion, and net profit to mother of -RMB 10.66/0.06/RMB 1,010 billion. Assuming a WACC of 9% and a sustainable growth rate of 3%, we used the DCF method and the NPV method respectively to estimate the target market value of RMB 59,342 billion, and the corresponding stock price was RMB 60.20 (up from RMB 59.21). Maintain a “buy” rating.
Risk warning: risk of R&D or sales falling short of expectations, industry policy risk.